Interim Report January-September 2015 Page 1 of 19 NAXS Nordic Access Buyout Fund AB (publ) Interim Report January – September 2015 Nine months 2015 x Net profit/loss for the period amounted to MSEK 89.2 (104.4). x Earnings per share amounted to SEK 6.00 (7.02). x Net asset value amounted to MSEK 805 (SEK 54.16 per share) at September 30, 2015, compared to MSEK 751 (SEK 50.53 per share) at year-end 2014. x Net cash amounted to MSEK 311 (SEK 20.94 per share) at September 30, 2015, compared to MSEK 167 (SEK 11.26 per share) at year-end 2014. x NAXS paid a dividend of SEK 2.30 per share for the fiscal year 2014. Third quarter 2015 x Net profit/loss for the quarter amounted to MSEK 30.8 (59.7). x Earnings per share amounted to SEK 2.07 (4.02). Comments by the CEO Despite a volatile environment, NAXS had another solid quarter, with a continued increase in NAV and a stable share price. The NAV per share grew by 4% during the third quarter, and by 12% during the first nine months of 2015 (including the dividend paid). Barring a substantial deterioration of the market conditions, we continue to hold positive views on the Company’s future developments. Lennart Svantesson
Transcript
Interim Report January-September 2015 Page 1 of 19
NAXS Nordic Access Buyout Fund AB (publ) Interim Report January – September 2015
Nine months 2015
x Net profit/loss for the period amounted to MSEK 89.2 (104.4). x Earnings per share amounted to SEK 6.00 (7.02). x Net asset value amounted to MSEK 805 (SEK 54.16 per share) at September 30, 2015,
compared to MSEK 751 (SEK 50.53 per share) at year-end 2014. x Net cash amounted to MSEK 311 (SEK 20.94 per share) at September 30, 2015,
compared to MSEK 167 (SEK 11.26 per share) at year-end 2014. x NAXS paid a dividend of SEK 2.30 per share for the fiscal year 2014.
Third quarter 2015
x Net profit/loss for the quarter amounted to MSEK 30.8 (59.7). x Earnings per share amounted to SEK 2.07 (4.02).
Comments by the CEO
Despite a volatile environment, NAXS had another solid quarter, with a continued increase in NAV and a stable share price. The NAV per share grew by 4% during the third quarter, and by 12% during the first nine months of 2015 (including the dividend paid). Barring a substantial deterioration of the market conditions, we continue to hold positive views on the Company’s future developments. Lennart Svantesson
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Financial summary
2015 1/1–9/30
2014 1/1–9/30
2015 7/1–9/30
2014 7/1–9/30
Net profit/loss for the period, KSEK 89 184 104 368 30 821 59 712 2015
09/30 2014 12/31
Private equity fund investments, KSEK 494 499 587 105 Private equity fund investments in % of equity 61 78 Remaining commitments, KSEK 115 730 137 019 Total exposure to private equity fund investments, KSEK 610 229 724 124 Net cash, KSEK 311 406 167 447 Private equity fund investments per share, SEK 33.26 39.48 Net cash per share, SEK 20.94 11.26 Net asset value per share, SEK 54.16 50.53 Share price, SEK 54.00 49.90
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Operations
NAXS Nordic Access Buyout Fund AB (publ) (“NAXS” or the “Company”) is an investment company listed on the NASDAQ OMX Stockholm exchange and focusing on investments in Nordic buyout funds. The objective is to make the Nordic private equity market accessible for a broader range of investors, while offering liquidity through the Company’s publicly traded shares. Operations commenced on April 17, 2007, and the Company was listed on First North on May 14, 2007, where it traded until its change of listing to NASDAQ Stockholm on June 8, 2010. NAXS is the Group’s parent company and is headquartered in Stockholm. In addition to the parent company, the Group consists of an operational Danish subsidiary, NAXS Nordic Access Buyout A/S, headquartered in Copenhagen, and a Norwegian subsidiary, NAXS Nordic Access Buyout AS, headquartered in Oslo. The Danish subsidiary operates as the holding company for the Group’s private equity fund investments. Naccess Partners AB has been contracted as the investment advisor to the Danish subsidiary.
Market review Financial markets experienced a high degree of volatility during the third quarter, which had a direct impact on the initial public offering activity. Nordic buyout managers nevertheless remained active during the period, both on the acquisition and exit side.
Fund portfolio As of September 30, 2015, NAXS had commitments to 8 underlying funds. At the end of the reporting period: x private equity fund investments amounted to MSEK 494, which corresponds to 61
percent of the Company’s equity; x remaining commitments amounted to MSEK 116, which can be used by the underlying
funds for new investments; x total exposure to private equity fund investments amounted to MSEK 610, which
corresponds to 76 percent of the Company’s equity.
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Private equity fund investments and total exposure to private equity fund investments (in % of equity) Evolution of private equity fund investments (in % of equity)
7% 24%
34%
53% 64%
80% 80% 78% 74% 68% 61%
0%
25%
50%
75%
100%
Q42007
Q42008
Q42009
Q42010
Q42011
Q42012
Q42013
Q42014
Q12015
Q22015
Q32015
Private equity fund investments Cash
61%
14%
0%
25%
50%
75%
100%
125%
61%
39%
0%
25%
50%
75%
100%
Total exposure to private equity fund investments 76% (MSEK 610 )
Equity MSEK 805
Remaining commitments
14% (MSEK 116)
Net cash 39% (MSEK 311)
Private equity fund investments 61% (MSEK 494)
Private equity fund investments 61% (MSEK 494)
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The net asset value (NAV) per share increased by 12% during the first nine months of 2015 and by 15.6% over 12 months (including the dividend paid).
NAV per share in SEK
Acquisitions and liquidity events Acquisitions 1 new acquisition was signed during the quarter, with Intera II taking a majority stake in HopLop, a company operating indoor play centers in Finland.
Portfolio Company Sector Country Fund HopLop Consumer & retail Finland Intera II In addition, several add-on acquisitions were completed during the quarter. Liquidity events 4 liquidity events took place during the quarter:
x Apax Europe VII closed the sale of iGate, an IT company that was acquired by the fund in 2011;
x FSN Capital III wound down a remaining business unit of Tactel, a company active in the telecom sector and where the main business unit had been divested earlier in the year, thus fully exiting the company;
Portfolio Company Sector Year of initial investment Fund
iGate Telecom/IT 2011 Apax Europe VII
Tactel Telecom/IT 2009 FSN Capital III
x Nordic Capital Fund VII proceeded to the refinancing of a portfolio company acquired in 2013;
x Intera Fund I proceeded to the refinancing of a portfolio company acquired in 2008.
As of September 30, 2015, NAXS underlying funds had acquired a total of 108 companies, 33 of which had been fully divested. These 33 exits have generated an average gross IRR of 23%. No. of portfolio companies acquired per year (exited companies in grey)
2007 2008 2009 2010 2011 2012 2013 2014 2015 Total No of new portfolio companies
12 16 12 18 16 15 9 7 3 108
No of exits during the year 4 4 11 9 5 33
No of companies acquired in the year that are now fully exited
7 9 5 5 4 3
33
September 30, 2015 x Total exposure to private equity fund investments: 76% of total equity x Private equity fund investments: 61% of total equity x Number of full exits since inception: 33 x Average gross returns generated by the 33 full exits since inception: 23% per year
5 7 7
13 12 12 9
7 3
7
9 5
5 4 3
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013 2014 2015
x 108 portfolio companies acquired since inception; x 33 companies fully exited; x Average holding period of the remaining 75 portfolio companies is approx. 4 years.
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Portfolio composition/diversification As of September 30, 2015, NAXS provided the following exposure to the private equity buyout sector: x 8 funds from 6 managers:
Fund Commitment
Year Commitment
Currency Initial Commitment Amount (in 000s)
Apax Europe VII LP 2007 EUR 15,000
FSN Capital III LP 2008 EUR 10,000
Herkules Private Equity Fund III LP 2008 NOK 40,000
Intera Fund I KY 2007 EUR 7,000
Intera Fund II KY 2011 EUR 7,250
Nordic Capital Fund VII LP 2008 EUR 20,000
Valedo Partners Fund I AB 2007 SEK 60,000
Valedo Partners Fund II AB 2011 SEK 65,000
x 3 different fund vintages and a diversification in terms of size segments, with small cap being the largest, as illustrated below (based on current commitments):
x 75 portfolio companies (remaining after 33 exits) acquired over a period of approx. 8
years, with the 10 largest holdings accounting for less than 26% of the total equity and no single portfolio company accounting for more than 8% of the total equity.
2007 21%
2008 57%
2011 22%
Vintage
Nordic small cap 35%
Nordic mid cap
19%
Nordic large cap 30%
Euro- pean large cap 16%
Size segment
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x a diversification per geography and sector as illustrated below (based on the fair value of the current portfolio companies):
Underlying funds Summary information regarding NAXS’ underlying funds is provided below:
Fund Fund size Segment Vintage Geographic focus
# of portfolio companies
# of exited portfolio companies
Valedo I MSEK 1,000 small cap 2007 Sweden 4 5
Intera I MEUR 125 small cap 2007 Finland 5 2
Apax VII MEUR 11,000 large cap 2008 Europe/Global 21 14
FSN III MEUR 375 mid cap 2008 Norway/Nordic 6 4
Herkules III MNOK 6,000 mid cap 2008 Norway/Nordic 7 4
Nordic Capital VII
MEUR 4,300 mid/large cap
2008 Primarily Nordic 16 2
Intera II MEUR 200 small cap 2011 Finland 10 1
Valedo II MSEK 2,000 small cap 2011 Sweden 6 1
Health-care 29%
Consumer goods & services
25%
Financial &
Business Service 14%
Industry 13%
Building & Construc-tion 9%
IT & Telecom
5%
Media 5%
Sectors
Nordic 64%
Europe 9%
RoW 27%
Geography
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Group
Financial performance, Third quarter 2015
Operating profit/loss The operating profit/loss amounted to KSEK 30,945 (61,096) for the quarter. The operating profit/loss includes a change in value of KSEK 33,802 (63,600). Operating expenses amounted to KSEK 2,857 (2,503).
Financial performance, Nine months 2015
Operating profit/loss The operating profit/loss amounted to KSEK 89,226 (105,212) for the interim period. The operating profit/loss includes a change in value of KSEK 98,175 (113,840). The currency effects are included in the changes in value, and amounted to KSEK -6,626 (23,419) for the interim period. Operating expenses amounted to KSEK 8,949 (8,628).
January 1–September 30, 2015 Changes in value of private equity fund investments: KSEK 98,175, whereof currency effects on private equity fund investments KSEK -6,626.
Financial items Financial items net totaled KSEK -42 (570) for the interim period. The net interest income amounted to KSEK 139 (686). Exchange rate profit/loss amounted to KSEK -181 (-116).
Tax and net profit The Group’s profit/loss after financial items for the interim period amounted to KSEK 89,184 (105,782). Income taxes amounted to KSEK 0 (-1,414). Net profit/loss after tax amounted to KSEK 89,184 (104,368). Earnings per share were SEK 6.00 (7.02).
Investments, financing and liquidity
Private Equity Fund Investments During the interim period, net repayments from private equity funds amounted to KSEK 21,798 (10,353). As of September 30, 2015, private equity fund investments amounted to KSEK 494,499 (600,491).
September 30, 2015 Private equity fund investments per share: SEK 33.26
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Financing The Group is financed with shareholders’ equity. Shareholders’ equity amounted to KSEK 805,279 (751,319) at the end of the interim period, corresponding to SEK 54.16 (50.53) per share and an equity/asset ratio of 100 (100) percent. September 30, 2015 Equity per share: SEK 54.16
Net cash At the end of the interim period, net cash amounted to KSEK 311,406 (167,447), which corresponds to SEK 20.94 (11.26) per share. During the period, cash and cash equivalents were invested in interest-bearing instruments or held on interest-bearing bank accounts, in accordance with the Company’s policy.
September 30, 2015 Net cash per share: SEK 20.94
Significant risks and uncertainty factors Significant risks and uncertainty factors are described in the Annual Report 2014. There has been no significant change in relation to risks and uncertainty factors since the publication of the Annual Report.
Future prospects It remains to be seen to which degree, if any, the Nordic private equity markets will be affected by the volatility that has been felt in the financial markets throughout the third quarter. In the short term, the listing activity for private equity backed companies is likely to remain more subdued than during the first half year of 2015.
Parent company The parent company has not had any sales during the period. The profit/loss after financial items amounted to KSEK 163,372 (60,105). During the period, dividend from subsidiaries amounting to KSEK 165,997 was received. The net interest income amounted to KSEK 390 (803) and exchange rate profit/loss amounted to KSEK -314 (670). Income tax amounted to KSEK 0 (-1,414). The net profit/loss amounted to KSEK 163,372 (58,691).
Organization The Company’s CEO is Lennart Svantesson. The Board of Directors consists of John D. Chapman (chairman), Tony Gardner-Hillman, Ramanan Raghavendran and Andrew Wignall.
Nomination Committee The Nomination Committee consists of Didrik Hamilton, representing himself, as chairman, Amaury de Poret, representing QVT Fund LP, and NAXS’ Chairman John D. Chapman as the convener. The Nomination Committee can be contacted via e-mail to Didrik Hamilton at [email protected].
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The share
The NAXS share was initially listed on First North on May 14, 2007. Since June 8, 2010, the share is traded on NASDAQ Stockholm. The share trades under the designation “NAXS”. The number of outstanding shares in the Company at the beginning and end of the interim period was 14,869,552. At the end of the interim period, the NAXS share price was SEK 54.00 and the total shareholders’ equity per share was SEK 54.16. The Company’s market capitalization was MSEK 803 and the number of shareholders was 717. Evolution of the share price during the first nine months of 2015
47
49
51
53
55
57
59
61
02 jan
15
16 jan
15
30 jan
15
13 feb
15
27 feb
15
13 m
ar 1
5
27 m
ar 1
5
10 a
pr 1
5
24 a
pr 1
5
08 m
aj 1
5
22 m
aj 1
5
05 jun
15
19 jun
15
03 jul
15
17 jul
15
31 jul
15
14 a
ug 1
5
28 a
ug 1
5
11 s
ep 1
5
25 s
ep 1
5
NAXS OMX Stockholm PI
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Accounting principles
The condensed consolidated financial statements have been established in accordance with the International Financial Reporting Standards (IFRS), as recognized by the EU. This report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Reporting legislation. The accounting principles applied in this report are described in the Annual Report 2014. The Parent Company follows the Swedish Annual Reporting legislation and the Swedish Financial Reporting Board RFR 2 for legal entities, which provides that the IFRS principles shall apply.
Financial information Contact persons
Year-End Report: January 29, 2016 Lennart Svantesson, CEO +46 73 311 00 11 [email protected]
Ticker codes NAXS SS in Bloomberg NAXS.ST in Reuters
NAXS Nordic Access Buyout Fund AB discloses the information provided herein pursuant to the Swedish Securities Markets Act. The report was submitted for publication at 8.30 CET on October 22, 2015. This report is an in-house translation of the original report in Swedish
Stockholm, October 22, 2015 John D. Chapman Chairman
Tony Gardner-Hillman Director
Ramanan Raghavendran Director
Andrew Wignall Director
Lennart Svantesson Chief Executive Officer
This report and other information are available on www.naxs.se NAXS Nordic Access Buyout Fund AB (publ) Corp. Reg. No. 556712-2972 Grev Turegatan 10 114 46 Stockholm, Sweden Tel: +46 8 611 33 25, E-mail: [email protected]
NAXS Nordic Access Buyout Fund AB (publ), corporate identity number 556712-2972
Introduction
We have reviewed the condensed interim report for NAXS Nordic Access Buyout Fund AB (publ) as at September 30, 2015 and for the nine months period then ended. The Board of Directors and the Managing Director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements, ISRE 2410 Review of Interim Financial Statements Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act regarding the Group, and in accordance with the Swedish Annual Accounts Act regarding the Parent Company.
Earnings per share, SEK* 6,00 7,02 2,07 4,02 Average number of shares, 000s* 14 870 14 877 14 870 14 872 * Basic and diluted
Consolidated Statement of Comprehensive Income Amounts in SEK 000s
2015 2014 2015 2014
1/1-9/30 1/1-9/30 7/1-9/30 7/1-9/30 Net income 89 184 104 368 30 821 59 712 Other comprehensive income Items which will be reversed to the income statement
Exchange differences -1 023 -1 215 385 -406 Total comprehensive income 88 161 103 153 31 206 59 306
Consolidated Balance Sheet Amounts in SEK 000s
2015 2014
9/30 12/31 Assets Private equity fund investments 494 499 587 105 Total non-current assets 494 499 587 105
Other receivables 312 201 Cash and cash equivalents 311 406 167 447 Total current assets 311 718 167 648 Total assets 806 217 754 753
Equity 805 279 751 319 Current liabilities 938 3 434 Total equity and liabilities 806 217 754 753
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Consolidated Net cash Amounts in SEK 000s
2015 2014
9/30 12/31 Cash, bank and short-term investments 311 406 167 447 Total net cash 311 406 167 447
Consolidated Statement of Changes in Equity Amounts in SEK 000s
2015 2014 2014
1/1-9/30 1/1-12/31 1/1-9/30 Equity at the beginning or the period 751 319 653 803 653 803 Repurchase of own shares 0 -778 -778 Dividend -34 200 -29 759 -29 759 Total comprehensive income for the period 88 160 128 053 103 153 Shareholder's equity at the end of the period 805 279 751 319 726 419
Consolidated Statement of cash flows analysis Amounts in SEK 000s
2015 2014 1/1-9/30 1/1-9/30 Profit/loss after financial items 89 184 105 782 Adjustment for non-cash items, etc. 69 967 -88 300 Income tax paid - - Cash flow from operating activities before changes in working capital 159 151 17 483 Cash flow changes in working capital -2 608 -1 313 Cash flow from operating activities 156 543 16 169 Acquisitions/disposals of private equity fund investments, net 21 798 10 353 Cash flow from investing activities 21 798 10 353 Repurchase of own shares - -778 Dividend -34 200 -29 759 Cash flow from financing activities -34 200 -30 537 Cash flow during the period 144 141 -4 015 Cash and cash equivalents, beginning of period * 167 447 131 008 Exchange-rate differences in cash and cash equivalents -182 -1 331 Cash and cash equivalents at the end of the period 311 406 125 662 * Including short-term investments
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Parent Company Income Statement Amounts in SEK 000s
2015 2014 2015 2014 1/1-9/30 1/1-9/30 7/1-9/30 7/1-9/30 Operating costs -2 701 -2 838 -834 -705 Operating profit/loss -2 701 -2 838 -834 -705 Income from shares in group companies 165 997 61 470 165 997 61 470 Net financial items 76 1 473 588 346 Profit /loss after financial items 163 372 60 105 165 751 61 111 Income taxes - -1 414 - -1 630 Net profit/loss for the period 163 372 58 691 165 751 59 481
Parent Company Statement of Comprehensive Income Amounts in SEK 000s
2015 2014 2015 2014 1/1-9/30 1/1-9/30 7/1-9/30 7/1-9/30 Net profit/loss for the period 163 372 58 691 165 751 59 481 Total comprehensive income for the period 163 372 58 691 165 751 59 481
Parent Company Balance Sheet Amounts in SEK 000s
2015 2014
9/30 12/31 Assets Shares in subsidiaries 481 802 481 802 Receivables on group companies 24 141 24 455 Total non-current assets 505 943 506 257
Other receivables 381 201 Cash and cash equivalents 229 842 100 616 Total current assets 230 223 100 817 Total assets 736 166 607 075
Equity 735 628 606 456 Current liabilities 538 618 Total equity and liabilities 736 166 607 075
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Parent Company Statement of Changes in equity Amounts in SEK 000s
2015 2014 2014
1/1-9/30 1/1–12/31 1/1-9/30
Equity at the beginning of the period 606 456 578 252 578 252 Repurchase of own shares - -778 -778 Dividend -34 200 -29 759 -29 759 Total comprehensive income for the period 163 372 58 741 58 691 Shareholder's equity at the end of the period 735 628 606 456 606 406
Note 1
Operating costs Amounts in SEK 000s
2015 2014 2015 2014
1/1-9/30 1/1-9/30 7/1-9/30 7/1-9/30 Fee to the investment advisor -5 737 -5 276 -1 945 -1 674 Carry to the investment advisor -48 -244 - - Personnel expenses -1 242 -1 213 -413 -425 Other operating costs -1 922 -1 903 -499 -405
-8 949 -8 628 -2 857 -2 503 No related party transaction occurred during the period, except for remunerations to the board members and the managing director.
Note 2
Financial assets and liabilities NAXS’ financial instruments consist of fund investments, cash and cash equivalents and accounts payable. Level 3 investments includes only the Company's publicly traded share of the fund holdings / securities of unlisted companies (in some cases, also listed companies). When observable prices are not available for these securities, the fund manager uses one or more valuation techniques (e.g. yield methods or income-based methods), or a combination of techniques, for which sufficient and reliable data are available. Within Level 3, the use of market approach generally consists of earnings multiples of comparable companies, while the use of income-based approach generally consists of the present value of estimated future cash flows, adjusted for liquidity, credit, market and / or other risk factors.
For NAXS, the book value of all financial assets and liabilities corresponds to fair value. All amounts are shown in the reported balance sheets.
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Definitions
Cash & cash equivalents Cash, bank and short-term investments
Cash per share Cash & cash equivalents in relation to the number of shares
Commitment The maximum amount that a limited partner agrees to invest in a fund
Current commitments Acquisition cost for private equity fund investments, plus remaining commitments to private equity funds
Gross IRR The internal rate of return generated annually at the underlying private equity funds’ level, before the deduction of the management fees and carried interest
Net asset value The fair value of total assets, less net debt (corresponds to equity)
Net cash/Net debt Cash and cash equivalents, short-term investments and interest-bearing current and long-term receivables, less interest-bearing current and long-term liabilities
Private equity fund investments Fair value of investments in private equity funds
Total assets All assets and liabilities not included in net debt or net cash, which is the same as the balance sheet total, less asset items included in net debt or net cash and less non-interest-bearing liabilities
Total exposure to private equity fund investments Private equity funds investments and remaining commitments to private equity funds
